News

The latest construction figures released in May 2025 showed little overall growth in output during the first quarter, but a sharp increase in new orders provided a more positive signal for the forward pipeline.

Office for National Statistics data published on 15 May showed that total construction output was flat in Quarter 1 2025 compared with the previous quarter. New work increased by 0.9%, while repair and maintenance fell by 1.2%. Monthly construction output rose by 0.5% in March.*

More significantly for future workload, total construction new orders increased by 26.6% in Quarter 1 compared with Quarter 4 2024. The rise was driven mainly by infrastructure new work and private industrial new work.*

The Insolvency Service also reported 2,053 registered company insolvencies in England and Wales during April 2025, 3% higher than March, although 5% lower than April 2024.**

For developers and contractors involved in infrastructure-led projects, the increase in new orders provides a useful reminder that surety requirements linked to roads, sewers and adoption agreements should be considered early in the development programme.

Infrastructure Growth Can Create Bond Requirements Early

Large development and infrastructure projects often require security before the associated works are complete.

This can include obligations under:

• Section 38 agreements;
• Section 278 agreements;
• Section 104 agreements;
• road and sewer adoption arrangements; and
• other infrastructure or development agreements.

Our Section Bonds page explains these requirements in more detail.

Section Bonds Are Linked to Specific Development Obligations

A Section Bond provides financial security to the beneficiary while the relevant road, sewer or infrastructure works remain outstanding.

The exact bond will depend on the underlying agreement.

For example:

• a Section 38 bond may support the construction of roads intended for adoption;
• a Section 278 bond may relate to works affecting an existing public highway; and
• a Section 104 bond may support sewer adoption obligations.

The amount, wording and release mechanism will depend on the relevant authority, water company or other beneficiary.

Multiple Sites Can Increase Aggregate Exposure

For developers with several live projects, Section Bond requirements can accumulate quickly.

A business may have bonds outstanding across different sites at different stages of completion.

Each individual bond may be manageable, but together they can create a significant aggregate exposure for the surety.

Our Bond Capacity Explained guide explains how individual limits and total exposure can affect available headroom.

Bond Values May Reduce as Works Progress

Section Bonds do not always remain at their original value throughout the life of the project.

Depending on the agreement, the bond may reduce as the infrastructure works progress, inspections are completed or specific milestones are achieved.

Obtaining those formal reductions can be important because a bond that has not been reduced may continue to use more surety capacity than necessary.

The same principle applies when the works have been completed and the bond should be released.

Formal Release Matters for Future Capacity

A completed project does not automatically mean the surety exposure has disappeared.

Where formal release is required, the bond may continue to remain outstanding until the relevant authority or beneficiary confirms that the obligation has been discharged.

For developers expecting further requirements, ensuring completed obligations are formally released can create additional headroom for new bonds.

SPVs May Need Additional Support

Many development projects are delivered through special purpose vehicles or newly formed project companies.

These businesses may have limited trading history or standalone financial strength, even where the wider development group is well established.

Surety underwriters may therefore consider:

• parent-company strength;
• group support;
• funding arrangements;
• management experience;
• project viability; and
• the wider development pipeline.

Our Surety Bonds for New Companies & SPVs guide explains how these structures may be assessed.

Parent Company Support Can Strengthen an Application

Where the applicant itself has limited financial substance, support from a stronger parent or wider group may be relevant.

This can sometimes include a corporate indemnity, committed funding or other financial support, depending on the structure and the surety's requirements.

Our Parent Company & Group Support guide explains how wider group strength may support a bond application.

Facilities Can Help Developers With Repeat Requirements

Developers expecting bonds across several sites may benefit from considering a structured surety bond facility.

A facility can provide a clearer framework for repeat requirements, including expected aggregate exposure and individual bond limits.

This can be particularly useful where multiple sites are moving through planning, infrastructure and adoption stages at the same time.

Current Financial Information Still Matters

Even where the project itself is strong, the surety will still assess the financial position supporting the obligation.

Depending on the applicant, this may include:

• latest accounts;
• management information;
• group accounts;
• cash-flow information;
• details of development funding;
• existing bond exposure; and
• the wider project pipeline.

Our Surety Bond Information Required guide explains the documentation that may be needed.

Infrastructure Growth Should Be Matched by Surety Planning

The strong increase in new infrastructure orders reported in May points to a healthier forward pipeline in that part of the market.

For developers and contractors, that is positive, but it can also mean more infrastructure obligations, more adoption agreements and a greater need for bonded security.

Planning Section Bond capacity alongside the development programme can therefore help avoid delays when agreements need to be completed.